Cities are growing fast, but are they growing in the right way?

02 December 2016

 

Cities can be a powerful force for economic development, inclusion and sustainability, but we need to get better at unlocking their potential. Two years on from the launch of PwC’s Megatrends analysis, we have arrived at an important window of opportunity. Since 2014 the world has put pen to paper on three international agreements that will define our common future. Importantly, the success of each will be largely determined by how we plan, build and run our cities:

 

  1. The New Urban Agenda, adopted in Quito, Ecuador in Oct 2016
  2. The Paris Climate Change Agreement, agreed in Paris in Dec 2015
  3. The 2030 Agenda for Sustainable Development, aka the Sustainable Development Goals, adopted Sept 2015

 

Cities are economic powerhouses accounting for some 85% of global GDP in 2015, and they continue to drive productivity gains, job creation and innovation the world over. But how can we go about unlocking the power of cities that will have significant consequences at both local and global levels? Cities today consume 75% of global resources and account for 80% of greenhouse gas emissions.  So ensuring that their development is sustainable is essential if the very economic dynamism that makes cities so successful is not also going to imperil the planet’s future.  

RU GDP creation from cities

PwC estimates that an additional $78 trillion of investment in infrastructure will be needed around the world over the next 10 years. Ensuring that this investment contributes to cleaner, resilient and more environmentally efficient urban development is clearly critical.  Governments and business will need to work together to achieve this and nowhere is more important to get this right than in the fastest growing cities of all in the developing world.  

 

Today, for example, 60% of Africa’s urban dwellers live in informal and unplanned developments and 41% have no access to electricity. But, with relatively little infrastructure yet built, governments in the region have an opportunity to learn from others’ successes and mistakes and develop urban strategies that can capture the potential dividend of fast-growing, youthful populations.  

 

To achieve that, new approaches will be important and technology could be a key enabler of driving sustainable growth. For example, look at the way that mobile technologies have leapfrogged the need for fixed telecoms infrastructure in sub-Saharan Africa. As a result, innovative business models – such as mobile payments – are more widely used in the region than in many other countries. Similarly, innovative approaches that involved communities and individuals could drive new thinking about how to deliver infrastructure and services.

 
Governments will not be able to achieve all that they need to do to make cities’ development sustainable alone. Consequently, there is a major role and opportunity for businesses. We’re already seeing distinct approaches emerging.  For example, citizen-focused smart cities are being planned or retrofitted around the world, with the market expected to reach more than $750 trillion by 2021. On the other hand, smart cities can also mean ‘bottom up’ approaches, emphasizing robust planning and community-led initiatives such as self-build, community infrastructure management, co-operatives and micro industries. These approaches are helping to harness the potential of society and digital empowerment in equal measure.  

RU smart city spendings

So since PwC launched the Megatrends in 2014, the challenges and opportunities presented by rapid urbanisation are probably more widely acknowledged and are being treated with increasing urgency, particularly in economic development and climate change domains. But the skills and capabilities that got us to the precipice of change are not the same as those that will implement it. With the potential of cities attracting 1.5 million people each week, the choices and policies that determine urban development really will have a critical impact on the quality of life that billions of people are able to hope for. The platform is set and there is much to do.

 

To find out more about the issues that will inform those choices, take a look at the Rapid Urbanisation pages on the PwC Megatrends website.

 

Daniel Dowling | Director, Cities and Urbanisation in Advisory
Profile | Email | +44(0) 207 212 1289

 

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